The Supply of Doctors in Australia: Is There A Shortage?

Abhaya Kamalakanthan & Sukhan Jackson. The Supply of Doctors in Australia: Is There A Shortage? Discussion Paper No. 341 , May 2006, School of Economics, The University of Queensland, Queensland

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Abstract Many countries around the world are presently reporting a shortage of doctors. To understand the situation better, this paper reviews the current English language literature on the supply of doctors in developed and developing countries with a special interest in Australia. The definition of doctor shortage and the accepted ratio of patients to full-time equivalent (FTE) doctors that is followed in this paper, is the one that is provided by the Australian Government’s Department of Health and Ageing. The issue of supply imbalance with respect to doctors is one that is particularly controversial in Australia, with some policy-makers arguing that it is a problem of under-utilisation of existing doctors, not under supply. The paper focuses on the literature on (1) mobility issues relating to geographical and sectoral imbalances, (2) incentive issues (monetary and non-monetary) relating to medical specialisation imbalance and (3) government regulation issues relating to geographical, sectoral and professional specialisation imbalances. The paper offers some suggestions to deal with the problem of supply imbalance. One of the key findings is that developed countries such as Australia cannot continue to rely on foreign-born overseas trained doctors to fill the gaps in supply. Hence, to solve the medical workforce crisis, Australia will have to increase the number of doctors being trained.

EPrint Type: Departmental Technical Report

Keywords: Doctor, general practitioner, supply imbalance, Australia, mobility, migration, barrier to entry, regulation, incentive, training

Subjects: 340204 Health Economics

ID Code: JEL Classification I10, I11, I18, I19

Deposited By: Weaver, Belinda Abhaya Kamalakanthan* and Sukhan Jackson School of Economics The University of Queensland Brisbane Qld 4072 Australia Email: abby_q@hotmail.com

Corresponding author – Abhaya Kamalakanthan, School of Economics, University of Queensland, St Lucia, QLD, Australia, 4072. Ph – (+617) 3346 9456. Email – abby_q@hotmail.com

ISSN 1445-5523

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1 INTRODUCTION

Many countries around the world are presently reporting a shortage of doctors. One such

country is Australia. The usual reasons given for a shortage of doctors in economically

developed countries like Australia and Canada include an increase in the number of

physicians migrating to other countries, the early retirement of the baby-boomer

generation of doctors, and reduced hours worked by those doctors opting for a more

relaxed lifestyle. In addition, some doctors these days are also choosing less demanding

specialties, and restricting their practices to particular types of cases or services (Stoddart

& Barer, 1999).

The definition of doctor shortage this paper follows is provided by the Australian

Government’s Department of Health and Ageing. The department defines a district of

workforce shortage as a geographic area in which the population’s demand for healthcare

is not fully met. Population demands are considered not fully met when a community has

less access than the national average to medical services. In other words, in a district of

workforce shortage, the ratio of full-time equivalent (FTE) doctors to patients would be

greater than 0.71:1,000 (Australian Department of Health and Ageing, 2005). We accept

that this ratio of patients to FTE doctors as set by the Australian Government is the

official measure of over and under supply in this country. Thus in Australia, districts of

workforce shortage are regional rural and remote areas, as well as outer metropolitan

areas in capital cities that are experiencing doctor shortages (Australian Department of

Health and Ageing, 2005).

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The OECD (Organisation for Economic Co-operation and Development), of which

Australia is a member, accepts that its member countries have different benchmarks by

which physician shortages and surpluses are defined. This benchmark could be a

minimum physician-to-patient ratio or a target number of physicians per capita in rural or

deprived urban areas (Simoens & Hurst, 2006). In England for example, the National

Health Service Plan has set a target of 0.56 FTE primary care physicians per 1,000

population weighted for need in each area of England (Secretary of State for Health,

2000). Similarly, in the U.S., a range of physician requirements of 0.6 to 0.8 primary care

physicians per 1,000 population has been proposed (Council on Graduate Medical

Education, 1994).

Of relevance to policy-making is the point raised by Hawthorne & Birrell (2002), along

with other observers such as Prideaux (2001) that Australia is experiencing a doctor

shortage today because of policy choices made in the past. “Throughout the past decade

medical workforce planning in Australia has been dominated by the view that there are

too many doctors” (Hawthorne et al., 2002, p. 55). Concerns were raised in 1992 at

Australia’s ‘persistent over supply of doctors’, with doctor/patient ratios increasing by

approximately 67% over a 20 year period (Hawthorne et al., 2002). A major condition

that led to this perceived over supply was an increase in the number of foreign-born

overseas trained doctors securing professional registration.

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However, the issue of surplus is controversial. Hawthorne et al. (2002) argue that various

past policies have resulted in a considerable reduction over the years in the number of

doctors, and general practitioners (GPs) in particular. Some government officials and

medical school representatives agree with this standpoint but there are others who

disagree.1 Rather, they argue that the problem appears because existing doctors are being

under-utilised, not because there is an under supply.

To understand the situation better, we review the current literature on the supply of

doctors in developed and developing countries with a special interest in Australia. Where

relevant, we will focus on the supply of the GP - defined by the Royal Australian College

of General Practitioners (RACGP) as a medical practitioner who provides primary

comprehensive and continuing care to patients and their families within the community

(Britt, Miller, Knox, Charles, Valenti, Henderson, Pan, Sutton & Harrison, 2002). Finally

we will look at the main suggestions offered so far in the literature to deal with the

problem of supply imbalance. Before the literature is reviewed however, it is important to

briefly discuss some of the differences in definition between the notions of demand and

need in economics. This paper focuses on the concept of demand.

Conventional demand theory assumes that consumers are sovereign, well informed, and

make rational choices between different goods and services in order to maximise their

utility (Mooney, 2003). However, it is difficult to apply conventional demand theory in

its exact form in health economics, because often there is uncertainty and information

asymmetry. Therefore, with respect to healthcare, Grossman (1972) suggests that

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consumers’ demand is derived from their perception of their optimal level of health. In

other words, individuals demand healthcare because they are unsatisfied with their

current health state and wish to reach some higher health state, which they desire.

Conversely, consumers may be unaware of their current and future health states, and

hence would require a doctor to supply them with the necessary information for them to

make a rational decision regarding their treatment choices (Mooney, 2003). This

approach to healthcare, which is a merit good, is known as the ‘needs’ approach. A merit

good is defined by Margolis (1982) as any item of public expenditure that is socially

reasonable, but cannot be accounted for within the ordinary economic theory of demand.

Thus, economists see need as an evaluative, normative notion that has some objective

behind it. Need is not absolute or finite, rather it is dynamic and tends to grow over time

(Mooney, 2003). Its growth can also be a function of the growth in healthcare supply.

Because some needs will be more important than others, the extent to which certain needs

are met will be a function of the marginal costs and benefits of doing so. This entails the

performance of a cost-benefit analysis.

Hence, consumer sovereignty, and therefore demand, clearly conflicts with the concept of

need. However, demand at least possesses the crucial feature where individuals can

assess their own benefits, and so is easier to handle in comparison to the concept to need,

which is not only difficult to understand, but also requires a third party to be involved in

the valuing process (Mooney, 2003). Therefore, this paper will approach the supply

imbalance problem from the demand rather than the needs perspective.

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2 IS THERE A SUPPLY IMBALANCE OF DOCTORS?

A definition of supply imbalance from an economic perspective is given in the World

Health Organization (WHO) paper by Zurn, Dal Poz, Stilwell & Adams (2004), who

explain that imbalance occurs when the quantity of a given skill supplied by the

workforce and quantity demanded by employers diverge at the existing market condition.

In other words, a surplus or shortage is the result of disequilibrium between the demand

and supply for that particular labour. Zurn et al. (2004) also suggest that a typology of

supply imbalance of the medical workforce could be constructed. Of the numerous types

of imbalances that could be identified, perhaps the most concerning are those relating to

geography (urban and rural areas), government and private sectors, and to some extent

professional specialisation. Our review of the literature is limited to these three areas.

Of relevance to policy-making are the literature on (1) mobility issues relating to

geographical and sectoral imbalances, (2) incentive issues (monetary and non-monetary)

relating to medical specialisation imbalance and (3) government regulation issues relating

to geographical, sectoral and professional specialisation imbalances. The literature that

addresses the supply imbalance of the medical workforce is scarce as noted by Wharrad

& Robinson (1999), even though international organisations such as the WHO and the

World Bank have long recognised that the supply imbalance of doctors is a fundamental

problem in many countries.

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According to the World Bank’s World Development Report 1993: Investing in Health,

the primary reasons for the supply imbalance of doctors in many countries include over-

concentration of medical specialists but not enough primary care providers, and a

disproportionate number of the healthcare workforce employed in urban areas (World

Bank, 1993). As well, training in public health was neglected, as were health policy and

health management; and the cost of medical training was subsidised by public revenue

even though many physicians work in the private sector and earn relatively high incomes

(World Bank, 1993). Although the report is now outdated, many of its findings are still

true in most countries. Having not heeded the warnings on supply imbalance,

governments in many countries are now forced to face the consequences of not only

dealing with an unequal allocation of doctors, but also a shortage of GPs, the primary

care providers.

More recent studies by the WHO not only support the findings of the World Bank report,

but also raise additional reasons for the supply imbalance. For example, recent WHO

papers by Diallo, Zurn, Gupta & Dal Poz (2003) and Zurn et al. (2004) have brought to

our attention that the out-migration of doctors has created considerable difficulties for

some developing countries desperate to provide adequate coverage of the essential

healthcare services. This problem, commonly known as ‘brain drain’, can be external

(out-migration to another country) and internal (rural-urban migration within a country).

Many African doctors from the countries shown in Figure 1 for instance migrate within

the continent, and mostly to Southern African states, where salaries are often higher.

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Figure 1: Percentage of African medical practitioners who intend to migrate

Source: Vujicic, Zurn, Diallo, Adams & Dal Poz, 2004, ‘The role of wages in the migration of health care professionals from developing countries’, Human Resources for Health, p. 11.

The Australian Department of Health and Ageing provides a definition of GP shortage

that is similar to its description of doctor shortage. Districts of workforce shortage for

GPs are determined by comparing their supply of GPs with the national average supply.

The national average is the ratio of FTE GPs to population. The department considers

0.71:1,000 to be the standard GP to population ratio (the GP figure includes salaried

practitioners and is based on FTEs), and uses this as a measure to demonstrate

comparative workforce shortage (Australian Department of Health and Ageing, 2005).

This information is based on Medicare billing data and the latest Australian Bureau of

Statistics population data, and is updated quarterly. All Aboriginal Medical Services and

after-hours-only services are considered districts of workforce shortage, regardless of

their geographic location (Australian Department of Health and Ageing, 2005).

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The Robin Hood Index has been used by Gravelle & Sutton (1998) and Kennedy,

Kawachi & Prothrow-Stith (1996) to measure the unequal allocation of doctors, and is

calculated as the number of GPs per person divided by the crude mortality rate

(Wilkinson, 2000; Wilkinson & Symon, 1999). From their studies of the supply of GPs in

Australia based on the Robin Hood Index, Wilkinson (2000) and Wilkinson et al. (1999)

found some interesting results. The findings show that on average, there are

approximately 920 people per full-time GP in Australia.

Given that the Australian Department of Health and Ageing considers 0.71:1,000 to be

the standard GP to population ratio, the findings of Wilkinson (2000) and Wilkinson et

al. (1999) seem to suggest that on average, there is an over supply of GPs in Australia. In

fact, a state-by-state comparison found that three states, namely South Australia, New

South Wales (NSW) and the Australian Capital Territory (ACT) were relatively over

supplied. The remaining states, namely Queensland, Western Australia (WA), Victoria,

Tasmania, and the Northern Territory (NT) were relatively under supplied. Adjusted for

estimated demand, the findings show that the ACT is over supplied by 71% in

comparison to the rest of Australia, while WA is under supplied by 15% (Wilkinson,

2000).

In Australia, not only is the allocation of GPs between and within states and territories

unequal, but also it is clear that capital cities are greatly over supplied when compared to

the rural and remote areas of Australia (Wilkinson, 2000; Wilkinson et al., 1999). Indeed,

the Australian Department of Health and Ageing supports this view, and asserts that most

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rural and regional areas and many outer metropolitan areas in the capital cities are

considered to be the districts of workforce shortage for GPs. The districts of workforce

shortage for general practice do not generally include the inner metropolitan areas of the

capital cities. Examples of districts of workforce shortage for GPs include Armidale,

Broken Hill, Coffs Harbour, Dubbo, Goulburn, Kempsey, Lismore, Maitland, Port

Stephens, Tamworth, Singleton, Wagga Wagga, Katoomba and Richmond in NSW;

Tuggeranong in the ACT; Alice Springs, Katherine and Tennant Creek in the NT; Exeter

and Bridgewater in Tasmania; Broome, Geraldton, Kalgoorlie and Port Headland in WA;

Cloncurry, Esk, Gympie, Kelso, Mt Isa, Nerang, Port Douglas and Yeppoon in

Queensland; Ballarat, Corio, Mildura, Swan Hill, Torquay, Hastings, Mornington

Peninsula and Seaford in Victoria; and Mt Gambier, Port Wakefield and Piccadilly in SA

(Australian Department of Health and Ageing, 2005).

As Australia is highly urbanised, the implication is that most of the population (65%) is

over supplied, relative to the national average, with the greatest over supply being in

Sydney, where 33% fewer people share a full-time GP, compared to the whole of NSW

(Wilkinson, 2000). On the other hand, the greatest under supply is in Queensland with

133% more people sharing one GP. Table 1 shows the unequal distribution of employed

practitioners in Australia between the cities, regional and remote areas. It should be noted

that over half of the 43,010 practitioners employed in cities were specialists (14,580),

specialists-in-training (5,116) or non-clinicians (3,621) (Australian Institute of Health and

Welfare, 2005).

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Table 1: Employed practitioners in Australia, 2000 to 2003

FTE rate (a) Major cities Inner regional Outer regional Remote Very remote Occupation 2000 2003 2000 2003 2000 2003 2000 2003 2000 2003

Clinicians 285 294 166 170 139 149 143 154 128 133 Primary care 105 102 88 89 83 85 99 97 100 95 Hospital non-specialist 32 36 18 17 13 19 21 24 21 30 Specialist 108 115 51 55 34 36 17 26 N/A 7 Specialist-in-training 40 42 9 9 10 10 6 7 5 N/A Non-clinicians 25 26 6 8 8 10 10 9 10 10 Total 309 321 172 178 147 159 152 163 138 143 Source adapted from: Australian Institute of Health and Welfare, 2005, Medical Labour Force 2003, p. 12. (a) FTE rates are per 100,000 population and based on a 45-hour week.

These findings confirm the well-documented fact that rural Australians have poorer

access to medical services than their urban counterparts, as in the U.S., Canada and

Britain (Ellsbury, Doescher & Hart, 2000; Wilkinson, 2000). Wilkinson et al. (1999) go

further to suggest that 10-13% more GPs are required in Australia to ensure an equal

national allocation. However, it should be noted that the accuracy of these predictions is

questionable because the study used Census data reporting where GPs live and not where

they work. Therefore, more research is needed in this area. In the next section, we focus

on the discussion in the literature on three areas of supply imbalance: rural versus urban,

government versus private, and the imbalance of professional specialisations.

2.1 Geographical Imbalance of Supply

Geographical imbalances are a concern in most countries (Blumentahl, 1994). The most

worrying problem in many health systems is the rising trend of rural-to-urban brain drain.

Adams & Hicks (2000) argue that in both industrialised and developing countries, urban

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areas almost invariably have a substantially higher concentration of physicians than rural

areas. They further add that while this pattern is not surprising, given that most healthcare

professionals would prefer to settle in urban areas, where there are more opportunities

and amenities; it is in the rural and remote areas that the most severe public health

problems are found.

Countries such as Australia have attempted to retain and deploy doctors in rural areas

through a variety of methods. Van Lerberghe, Conceicao, Van Damme & Ferrinho

(2002b) provide a discussion on such measures which include decentralising the location

of training institutions, introducing recruitment quotas to ensure that the most peripheral

areas are represented among medical students, and making rural field experience

compulsory during medical training. They conclude that the results are mixed; the main

constraint being the inequitable socio-economic development of rural areas compared to

urban areas and the comparative social, cultural and professional advantages of cities.

Cities offer doctors more opportunities to diversify earnings by working both in the

government sector and in private practice. This rural-to-urban flow is compounded by

government-to-private practice brain drain (Van Lerberghe et al., 2002b).

2.2 Supply Imbalance between Government and Private Sectors

In the literature (for example Humphrey & Russell, 2004; Gruen, Anwar, Begum,

Killingsworth, & Normand, 2002; Van Lerberghe, Adams, & Ferrinho, 2002a; Van

Lerberghe et al., 2002b), it is widely acknowledged that government health employees

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boost their incomes with private practice; and sometimes in an ambiguous context that

compromises their government related responsibilities. Often, the result is a supply

imbalance between the government and private sectors. The dual system of healthcare

delivery adopted in many developed and developing countries has unintentionally

promoted this development. From a sample of 40 developing countries it has been found

by Hanson & Berman (1998) that an average of 55% of physicians work in the private

sector. Zurn et al. (2004) attempt to provide reasons for the unequal allocation of doctors

by arguing that characteristics of the health system such as market failure are a cause of

supply imbalance. They point out that even if governments attempt to correct market

failures through policy interventions, implementing such policies may prove difficult.

Problems can be exacerbated when policy-makers fail to modify their workforce policies

according to the changing demands of the population. Keeping in mind that 0.71:1,000 is

the ideal GP to population ratio in Australia, between 1984-1985 and 1998-1999 the

average number of patients per full-time practising GP fell from 1,407 to 1,045

respectively in the capital cities (Hawthorne et al., 2002). Although the practitioner rate

rose from 267 to 283 practitioners per 100,000 population between 2000 and 2003, the

average weekly hours worked per practitioner fell from 45.5 hours to 44.4 hours during

the same period (Australian Institute of Health and Welfare, 2005). As is shown in Table

1, there was also a greater increase in the supply of practitioners in the major cities and in

the outer regional areas (increase of 12 FTE per 100,000 population), than in the very

remote areas (increase of 5 FTE per 100,000 population) (Australian Institute of Health

and Welfare, 2005). Hence, from the available statistics, it appears that Australia has a

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surplus of doctors, especially GPs in some urban locations, but evidence points to the

contrary in most rural areas (Prideaux, 2001; Australian Medical Workforce Advisory

Committee, 2000).

According to Stoddart et al. (1999), Canada was in a similar situation of surplus supply

more than a decade ago when concerns were raised regarding the persistent surplus of

doctors. In the years leading up to the deliberate policy reduction in doctor supply in

Canada, the supply of physicians increased by 170% between 1964 and 1993 while the

country’s population grew by only 48% (Stoddart et al., 1999). Some of the conditions

that led to an over supply in Canada included a major expansion in domestic training

capacity, and a lack of distribution across specialties that reflected the changing demands

of the population. However, many rural and remote areas of Canada, like Australia, still

remained relatively underserviced. On top of this, a modest 3% reduction in the

physician/population ratio between 1993 and 1998, although on the heels of an 80%

increase in that ratio over the previous 29 years, created an instant shortage (Stoddart et

al., 1999). Hence, the above discussion highlights some of the serious effects a supply

imbalance can have on the healthcare system.

2.3 Imbalance of Medical Specialisation and Related Incentives

Imbalance within the medical profession itself is a major issue in need of consideration.

Table 2 for instance shows that practitioner numbers vary considerably across selected

specialties in Australia. Although professional specialisation imbalances can arise for a

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multitude of reasons, one important factor is incentives (monetary and normative). The

World Health Report 2000 - Health Systems: Improving Performance defines incentives

as all the rewards and punishments that providers face as a consequence of the

organisations in which they work, the institutions under which they operate, and the

specific interventions they provide (WHO, 2000).

Table 2: Selected specialties: number of practitioners in Australia, 2000 to 2003

Main occupation 2000 2001 2002 2003 %

change 2000-03

% change 2002-03

Average annual change

(%) Specialty of practice

Anaesthesia (incl. Intensive care - anaesthesia)

2,120 2,368 2,491 2,524 19.10 1.30 6.00

Emergency medicine 341 442 450 470 38.00 4.40 11.30 General surgery 970 924 995 990 2.00 -0.60 0.70

Obstetrics & gynaecology 1,001 1,123 1,119 1,179 17.70 5.40 5.60

Psychiatry 1,984 1,937 2,167 2,177 9.70 0.50 3.10 All specialties 16,008 17,124 17,762 18,093 13.00 1.90 4.20

Source: Australian Institute of Health and Welfare, 2005, Medical Labour Force 2003, p. 6.

It has also been noted in the literature (e.g. Adams et al., 2000; Kingma, 1999) that the

choice of payment mechanisms in the health system can have major implications for the

mode of practice and code of conduct because of the likely tension between financial

incentives and professional values. Chaix-Couturier, Durand-Zaleski, Jolly & Durieux

(2000) provide an example of such tension. They find for instance that salaried

physicians are likely to refer patients to specialists less frequently than fee-for-service

physicians. The effects of incentives were studied in three areas: financial impact on

providers under capitation or shared-risk plans, risks to the quality of care, and the impact

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on patient confidence (Chaix-Couturier et al., 2000; Dudley, Miller, Korenbrot & Luft,

1999; Grumbach, Osmond, Vranizan, Jaffe & Bindman, 1998).

3 REGULATED SUPPLY IN THE FORM OF ENTRY BARRIERS

Literature on the topic of regulation is comparatively limited. This is understandable to a

certain extent because while regulation has a role in the health system of most countries,

the degree and type of regulations implemented are different from country to country.

This makes the task of studying regulations more challenging. Available literature on

medical workforce regulation in Australia, although limited, will be the main interest in

this section.

The type of regulation governing a profession can have a substantial impact on supply.

The medical profession in most developed countries faces strict regulation. Doctors face

considerable barriers to entry, which often include direct government intervention, and

rules adopted by professional associations, whose self-regulatory powers allow them to

set up entry requirements as well as rules of professional conduct (Van den Bergh, 1997;

Zurn et al., 2004). Examples include those barriers with respect to the medical training

and licensing of local and foreign-born overseas trained doctors. Even though the

proponents of regulated supply claim that stringent barriers would promote high quality

healthcare and protect patients from incompetent providers, the downside of such

regulations is that they can provide the doctors as a group, with enormous market power

(Zurn et al., 2004).

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As noted by Noether, “economists have long recognised that the market for physician-

provided services cannot be described adequately by a purely competitive model” (1986,

p. 504). He reminds us that the supply of physicians permitted to practice in the majority

of developed countries has been restricted for a considerable period of time. In the U.S.

as in other countries, successful barriers to entry have been maintained through a

combination of medical school accreditation and mandatory state licensing of individual

practitioners (Noether, 1986). The nature of a country’s barriers to entry into medical

practice is an unstable factor, which could worsen the problem of supply imbalance. It is

important to recognise that the existence of entry barriers to the medical profession in

most developed countries is largely a result of the widely held view in the past that there

were too many doctors in the medical workforce. In Australia, a range of measures was

adopted in the 1990s as a response to the perceived surplus of doctors. Many of these

measures, originally aimed to curb expansion of the medical workforce, are still in place

today.

The main regulations discussed by Hawthorne et al. (2002) and the Australian Medical

Workforce Advisory Committee (2000), include reducing the number of medical school

enrolments, points penalties to doctors applying to immigrate, the subsequent removal of

the right of doctors to apply for migration as permanent residents under Australia’s points

tested skilled migration categories, and placing a limitation on the number of entrants to

the RACGP’s postgraduate training programme for GPs. Other regulations include

restricting access to Medicare provider numbers to those who pass the RACGP training

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programme, and placing various restrictions on the circumstances under which foreign-

born overseas trained doctors can practise if they enter Australia with temporary

employment contracts.

The urgent demand for more doctors has led to a lowering of some of these entry barriers

(e.g. employing more foreign-born overseas trained doctors on a temporary basis) to cope

with an ageing population, an increase in the number of women in the medical workforce,

public pressure for improved access and quality, and the growing shortage of doctors in

rural areas (Australian Medical Workforce Advisory Committee, 2000). Consequently,

the new policies introduced in Australia are to some extent contrary to the previous ones.

To ease the shortage of GPs, particularly in rural Australia, foreign-born overseas trained

doctors are offered contracts to work in pre-arranged employment. There has been a

considerable increase in the number of overseas trained doctors arriving in Australia

annually.

Hawthorne et al. (2002) who studied the Australian situation have noted the surge in

demand for temporary resident visas each year: 1,923 visas were issued in 2001-2002

compared to 1,209 in 1997-1998, and just 664 in 1993-1994. Hence, owing to difficulties

faced by employers in recruiting locally trained doctors (especially in specialisations and

in locations where there are serious shortages), the Federal, State, Territory and Local

Governments are now increasingly forced to rely on foreign-born overseas trained

doctors to provide healthcare services in Australia (Hawthorne et al., 2002).

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Despite Australia’s growing reliance on foreign-born overseas trained doctors the official

view of the Australian Government is that there continues to be a surplus of doctors and

“… that there is a distribution problem, not a deficiency problem” (Hawthorne et al.,

2002, p.57). However, this view is not held by the Australian Medical Association

(AMA), which argues that there is no surplus of GPs in urban areas. In other developed

countries similar developments have been observed. For example, public concern

regarding the shortage of physicians in the U.S. has led to a substantial increase in the

number of medical schools, and the number of medical graduates has more than doubled

since the 1960s (Noether, 1986).

In 1999, British authorities decided to expand the medical school intake by roughly 20%,

and considered strategies to minimise medical student dropout rates (Goldacre, 1998). In

Canada medical school enrolments have risen to solve the doctor supply problem

(Stoddart et al., 1999). The general view in the literature is that the U.S., Canada and

Britain are yet to achieve the objectives of their national medical workforce policies, that

is, to train enough doctors locally to achieve self-sufficiency without relying on

immigration, and to ensure that supply best matches demand (Goldacre, 1998; Horvath,

Gavel, Harding, & Harris, 1998; Sullivan, Watanabe, Whitcombe & Kindig, 1996).

4 MOBILITY TRENDS AMONG MEDICAL PRACTITIONERS

Most relevant to our discussion on the supply imbalance of doctors is the extent of their

labour mobility. Migration can be either internal or international, and we will look at the

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literature on these types of migration. Diallo (2004) defines internal migration as the

movement of doctors within national borders, across subnational administrative units, or

between rural and urban areas. On the other hand, international migration describes the

movement of doctors who temporarily or permanently settle abroad, mainly because of

problems in their home country. Such international migrants may include those who are

no longer working in the area of healthcare in the host country, foreign-born trainees and

graduates who do not return to their home country, and migrants who eventually return to

their home country and continue to work in healthcare (Diallo, 2004). Physicians in

particular, tend to move abroad for training purposes (Forcier, Simoens & Giuffrida,

2004).

While migration can offer considerable benefits to both the home (the country from

which the doctor is migrating) and the host (the country to which the doctor is migrating)

countries, it can also create costs for the home and the host countries. The cost effects are

rarely felt as strongly as in the healthcare sector. Brain drain not only can lead to severe

repercussions for the home country, but may also produce consequences for the host

country, especially if it is an economically developed country. Therefore, it is imperative

to look into the literature on the impact of migration on the supply of doctors in various

countries. The international migration of physicians is a prominent issue in the 21st

Century. This fact is widely documented in the literature including Diallo (2004),

Martineau, Decker & Bundred (2004), Pang, Lansang & Haines (2002), Saravia &

Miranda (2004), Vujicic, Zurn, Diallo, Adams & Dal Poz (2004), and Stilwell, Diallo,

Zurn, Dal Poz, Adams & Buchan (2003). They all attribute this migration to several

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factors such as the lack of opportunity in home countries, a shortage of doctors in host

countries, and rising demand for medical services as a result of the ageing population.

Although both financial and non-financial incentives can motivate health professionals to

relocate to another country as pointed out by Brown & Connell (2004) and Stilwell,

Diallo, Zurn, Vujicic, Adams & Dal Poz (2004), enhanced employment prospects and the

possibility of making substantially more money are the most commonly cited reasons for

migrating to another country (Harrison, 1998; Stilwell et al., 2004; Vujicic et al., 2004).

These factors can have serious implications for the health systems of the home and the

host countries.

In fact, Vujicic et al. (2004) have found that, even after adjusting for the difference in the

cost of living, wage differences are large in their study, having carried out an analysis of

data on wage differentials in the healthcare sector between home and host countries. They

cite evidence to show that even in high-wage home countries, health sector salaries

constitute only about one-third of the amount of salaries in developed host countries such

as Australia, Canada, France, Britain and the U.S. As Figure 2 illustrates, the physician

wage in the U.S. is roughly 25 times the physician wage in Zambia, approximately 22

times the physician wage in Ghana, and about 4 times the physician wage in South Africa

(Vujicic et al., 2004). Accordingly, they suggest that wage differentials between home

and host countries are so large that small increases in healthcare wages in home countries

are unlikely to have a major impact on the migration decision of doctors (Vujicic et al.,

2004).

21

Figure 2: Ratio of physician wages (PPP$US), host country to home country

Source: Vujicic, Zurn, Diallo, Adams & Dal Poz, 2004, ‘The role of wages in the migration of health care professionals from developing countries’, Human Resources for Health, p. 9.

The trend in the inflow of foreign-born overseas trained doctors is clearly different

among the host countries, but the literature is uncertain on whether doctors make up the

bulk or only a small proportion of the skilled migrants (Stilwell et al., 2003; Martineau et

al., 2004). Researchers seem to hold opposing views on how the trend of inflow of

foreign-born physicians has fluctuated. For instance, according to Vujicic et al. (2004)

the proportion of foreign-born overseas trained doctors in Canada has decreased quite

considerably. This view contradicts the findings of Forcier et al. (2004) who argue that

foreign-born physicians make a substantial contribution (20.6%) to the national supply of

22

physicians in Canada. In other western OECD countries they also comprised more than

20% of the total physician workforce in 2000 (see Figure 3).

Figure 3: Percentage of practising foreign-born overseas trained doctors, 2000

Source: Forcier, Simoens & Giuffrida, 2004, ‘Impact, regulation and health policy implications of physician migration in OECD countries’, Human Resources for Health, p. 4.

Foreign-born overseas trained doctors can offer numerous benefits to host countries

because foreign-born physicians are usually recruited to fill the gaps in local medical

labour supply. The greatest benefit is that they are more flexible and willing than local-

born doctors to practise in less popular workplace settings. These may include less

favourable working conditions such as night shifts, and certain geographical areas such as

the rural areas, which many local-born physicians tend to avoid (Bundred & Levitt, 2000;

23

Forcier et al., 2004; Martineau et al., 2004; Williams, 1998). Recruitment of foreign-born

overseas trained doctors to work in rural areas is not new; it is a convenient strategy to

solve the problem of inadequate local supply in developed countries such as Australia,

the U.S. and Britain. According to Table 3, the largest group of foreign-born overseas

trained doctors employed in Australia between 1994 and 1996, were born in South Africa

(75.3%) and Britain/Ireland (74.8%). However, as this data is a decade old, and more

recent data is difficult to obtain, there is a need for a more updated study in this area.

Table 3: Labour market outcomes for foreign-born overseas trained doctors by country/region of birthplace, 1994-1996 arrivals

Employment outcomes in Australia, percentage Birthplace Doctors Other

professionals Unemployed Number in labour

force

Total number

South Africa 75.30 11.10 0.00 9.90 81

Britain/ Ireland 74.80 11.50 0.00 10.40 469

India 50.20 4.50 11.70 31.30 265 Hong Kong 40.50 25.70 4.10 4.10 74

Malaysia 38.70 19.40 9.70 32.30 31 Vietnam 30.00 0.00 15.00 47.50 40 Southern Europe 10.20 0.00 30.50 59.30 59

Philippines 7.90 7.90 23.70 50.00 38 China 3.00 11.20 12.90 57.90 394 Russia/ Balkans 2.70 2.70 16.10 67.90 112

Lebanon 0.00 0.00 0.00 0.00 0 Other 39.90 8.30 10.80 33.80 1,241 Total overseas 39.90 9.00 9.70 33.80 2,804

Source adapted from: Hawthorne et al., 2002, p. 59.

24

Other benefits for the host country include free riding on potential savings to be made

from the cost of training and education (Martineau et al., 2004). Patients in the host

country may benefit by better access to medical care and even reduced prices arising

from increased competition between doctors, which may eventually improve the quality

of services (Forcier et al., 2004). However, Martineau et al. (2004) warn that the host

countries should see the recruitment of foreign-born physicians as only a temporary

solution to their supply problems. Continuous reliance on migrant doctors may hinder the

development of locally trained supply, and in some cases, there could be tension between

the local interests of the country and its policy on overseas recruitment (Martineau et al.

2004).

Widespread international migration can in turn lead to what is known as rural-to-urban

brain drain in the home countries. The ultimate losers of international migration tend to

be the health service users in the rural areas because rural areas often come lowest in the

ranking of preferred work locations. Thus, if a vacancy in the city arises owing to the

incumbent migrating overseas, a reshuffle takes place whereby the rural physician fills

the city vacancy (Martineau et al., 2004). Urban areas are often perceived to be more

accommodating with respect to professional, family and social connections, and

achieving professional ambitions (Zurn et al., 2004).

The other main reasons for the high concentration of GPs in the cities are lifestyle-related

(urban areas offer better access to amenities), spouse-related (more employment

opportunities), and child-related (better schools and access to universities). However,

25

despite the seriousness of this issue, the available literature on the rural-to-urban brain

drain of doctors is very limited compared to the literature on international migration. This

may be because it is generally more difficult to collect data on mobility trends within a

country than mobility trends from one country to another. “So far there is virtually no

country in the world that has solved the problem of a rural/urban imbalance of the

physician workforce” (Zurn et al., 2004, p. 11).

5 SOME SOLUTIONS TO THE SHORT SUPPLY

In their 2002 paper, Alwan and Hornby put forward what they believe to be the main

obstacles facing human resources development in the health sector in many countries.

They argue that in most countries there is no comprehensive national health development

plan or strategy for health sector development, the prerequisites for health staff

development are not in place, and the education programmes of academic institutions are

not linked to the demands of the country. They also observe that policies of admission to

the medical profession are unrealistic, insufficient attention is given to continuing

education, primary healthcare and non-clinical activities are overlooked, and there is

often little or no coordination between ministries of health, universities, training

institutions and the demands of the population at large.

Alwan et al. (2002) propose that each country should develop a national strategy for

human resources for health, taking into account all of the above obstacles. While the

development of such a broad strategy may not be easy and could take time, there are

26

other more specific and practical strategies that many countries could adopt to solve the

problem of an unequal allocation of doctors from the geographical and sectoral aspects.

For instance, Wibulpolprasert (1999) suggests that development of a rural health

infrastructure will assist the allocation of doctors to rural areas. He has proposed a

number of educational strategies to increase doctor supply. First, students could be

recruited from rural areas for medical school admission, and there should be hometown

placement after graduation. Medical students should be encouraged to acquire rural

experience by utilising rural health facilities for training purposes. Lastly, fewer

opportunities for private practice should be provided so that more medical graduates are

kept in the government sector.

Wibulpolprasert (1999) stresses that for these strategies to be effective the student

recruits should be limited to those who grew up in the rural areas, and exclude those who

purposely move their residence to rural areas 2-3 years before enrolment just to be

eligible for admission. This proposal contradicts the current medical recruitment practice

in Australia where even students living in the cities are allowed to apply for admission to

rural medical schools. “Only consistent, integrated, unified rational strategies supported

by social and political commitment can guarantee the success of solving social inequity

and inequity in the distribution of doctors” (Wibulpolprasert, 1999, p. 21).

Wibulpolprasert (1999) also notes that rural recruitment and training has proved to be

quite effective in achieving rural allocation of doctors in Australia and the U.S.

Moreover, he states that the establishment of regional medical schools is a good measure

27

for a more balanced allocation of doctors. A measure that could keep medical graduates

in the government sector is to provide medical licenses to graduates only after they have

completed a period of government work (Wibulpolprasert, 1999).

Whilst it is unlikely that the debate regarding doctor shortage in Australia will be settled

soon, there are some steps the government could immediately take to improve the supply

situation. It is important for policy-makers to realise that the reliance on foreign-born

overseas trained doctors to fill the gaps in supply cannot be a permanent solution.

Therefore, it is difficult to see how the medical workforce crisis can be solved without

increasing the number of doctors being trained in Australia (Hawthorne et al., 2002). This

means that the current quota for medical school places in Australia will have to increase

and more funding should be allocated to medical schools.

As Prideaux (2001) points out, all of the government funded medical schools in Australia

have suffered cuts in their operating grants since 1996 (the term of the current Australian

Government). This has come on top of a major restructuring of Australian universities at

the beginning of the 1990s, as well as cuts in the funding of government hospitals for

more than a decade, including all teaching hospitals. This suppressive environment has

made it difficult for medical schools to enhance their programmes in an appropriate and

effective way (Prideaux, 2001). Another move to improve supply is to increase the

number of places available under the RACGP’s postgraduate training programme for GPs

in order to address the chronic shortage of GPs, particularly in rural areas (Hawthorne et

al., 2002). At least a step in the right direction is the Australian Government funding for a

28

medical school at James Cook University in Northern Queensland, and nine more rural

clinical schools around Australia, including Victoria’s first rural medical school at

Deakin University, the University of Western Sydney, University of Wollongong and the

University of Notre Dame (Australian Medical Workforce Advisory Committee, 2000).

Given the inadequacy of the academic literature in this important area, more studies need

to be conducted on the impact of regulation on the supply of doctors. The newly

emerging trend of setting up private medical schools has occurred not only in Australia

but also in other countries. While the establishment of new medical schools, especially

private medical schools, is a highly controversial issue in Australia, the benefits and costs

of this relatively new phenomenon is yet to be analysed in the literature. In fact, the

overall literature on private medical schools is inadequate.

The main concerns that have surfaced with respect to private medical schools are to do

with equality of opportunities. As for new medical schools in general, the Australian

Medical Students Association (AMSA) believes that they should only be established if

doing so would serve the section of the Australian population currently under-represented

in the demography of medical students and graduates (Australian Medical Students

Association, 2002). For example, the medical school at James Cook University

(Australia’s only rural medical school) was established with the main purpose of

increasing the enrolment of students from rural and indigenous backgrounds (Prideaux,

2001).

29

Currently, the Australian medical student population is composed mainly of students

from the higher income groups who can afford to pay the Higher Education Contribution

Scheme-Higher Education Loan Programme (HECS-HELP) fees for medicine costing a

total of approximately $50,000 for a 6-year course. As a result, a major equity issue has

arisen with regards to medical education in the belief that prospective medical students

from a relatively high socio-economic background may have a better chance of studying

medicine than those from a lower socio-economic background (Australian Medical

Students Association, 2002). Hence, for the moment at least, the demography of medical

students cannot be described as egalitarian. The creation of private medical schools may

compound this problem because private universities would charge fees higher than

HECS-HELP. For instance, local students in the new medical programme at Bond

University on the Gold Coast must pay $46,620 in tuition fees per annum, with annual

increments reflecting increased costs (Bond University, 2006).

6 CONCLUSION

The aim of this paper was to review the current literature on the supply of doctors in

developed and developing countries, focusing particular attention on Australia. With this

in mind, the paper evaluated the literature that was the most relevant to policy-makers in

the area of medical workforce planning. The literature review was confined to (1)

mobility issues relating to geographical and sectoral imbalances, (2) incentive issues

(monetary and non-monetary) relating to medical specialisation imbalance and (3)

government regulation issues relating to geographical, sectoral and professional

30

specialisation imbalances. The paper utilised the definition of doctor shortage and the

accepted ratio of patients to FTE doctors that was provided by the Australian

Government’s Department of Health and Ageing. The department considers 0.71:1,000 to

be the standard doctor to population ratio, and uses this as a measure to demonstrate

comparative workforce shortage (Australian Department of Health and Ageing, 2005).

With respect to geographical and sectoral imbalances, the findings clearly indicate that

rural-to-urban brain drain is a considerable problem in many developed countries. For

example, the findings confirm that rural Australians have poorer access to medical

services in comparison to their urban counterparts, and this situation is also present in the

U.S., Canada and Britain. To remedy the situation, Australia has tried to retain and

deploy doctors in rural areas utilising various methods. However, the results have been

mixed. Government-to-private practice brain drain has also been found to compound

rural-to-urban brain drain.

Government regulation can further exacerbate the supply imbalance problem. In most

developed countries including Australia, entry barriers were initially put in place as a

result of the view that there were too many doctors in the medical workforce. However,

due to the growing shortage of doctors, especially in rural areas, many of these entry

barriers have since been lowered. Now governments in Australia are forced to rely on

foreign-born overseas trained doctors to provide healthcare services. This however, is not

a lasting solution to this problem. More permanent solutions include increasing the quota

for medical school places in Australia, and allocating more funding to medical schools

31

and teaching hospitals. Other policy suggestions to rectify supply imbalance in developed

and developing countries include establishing rural health infrastructure to assist in the

allocation of doctors to rural areas, recruiting student from rural areas for medical school

admission, and restricting opportunities for private practice so that medical graduates are

kept in the government sector.

32

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